When you consider the money managed by accountants, it’s no surprise there is an official CPA Code of Professional Conduct (“Code”) guiding members, accounting firms, and even accounting students. As accountants, our job is to ensure we provide sound, fair financial advice and management, adhering to strict business practices that protect our clients.
Discover more about the importance of ethics in accounting, the five fundamental principles of CPA ethics, and learn to spot red flags of unethical accounting practices.
Why Are Ethics In Accounting Important?

Simply put, unethical accounting practices impact the reputation of the accounting profession, resulting in lost clients, financial losses for firms and CPAs, legal penalties, and lost licenses. From a client perspective, the risks include:
- Fines and imprisonment for criminal offences related to fraud, taxes, misuse of funds, etc.
- Loss of trust of your clients and staff
- Loss of credibility for your brand
- Revocation of your professional license (depending on your business)
- Financial losses due to errors or misrepresentations of financial records
What Are The 5 Fundamental Principles Of CPA Ethics?

The following five principles are fundamental to CPA (Chartered Professional Accountant) conduct and accounting ethics:
1. Professional Behaviour
As CPAs, we are expected to conduct ourselves with the public interest at the forefront of our minds. We collectively protect the reputation of our profession by not acting in a way that erodes respect for our work. As a result, we strive for excellence in everything we do.
CPAs often hold senior positions, including Fractional CFOs, that give us authority to make decisions and offer advice which influences the success of businesses. As a result, our role demands ethical behaviour and compliance with all best practices and standards of our profession. By adhering to the highest possible standards, CPAs maintain a reputation as trusted professionals able to guide our clients and manage our firms focused on the client’s best interests.
2. Integrity and Due Care
Integrity and due care in accounting ensure we provide professional services with transparency, honesty, and fair dealing. Diligence in applying our technical and professional skills ensures the services we provide or the roles we fill as CPAs are always conducted with due diligence and careful and thorough work. It also ensures that those working under our supervision, such as bookkeepers within our firms, receive proper training and oversight to avoid Code breaches.
3. Objectivity
We deliver effective financial management by remaining objective in our work, ensuring our judgement is never compromised by bias, conflict of interest, or the undue influence of others. In fact, we understand our clients rely on us for honest advice and objective views that help inform their decisions and improve their professional judgement.
Our job is to remain objective, free of external influences or pressures from those who can gain from our unethical behaviour. We adhere to the Rules that govern what is considered a conflict of interest that help ensure we maintain independent thought when performing our work. It is also critical that we recognize when our objectivity is compromised.
4. Professional Competence
We are committed to keeping informed and to continuously developing professional skills to ensure our services remain relevant and compliant, and that we are competent in our role. We strive to improve our skills so we can provide the most meaningful and effective services and advice with a keen understanding of the most profound changes in the industry. We are also aware of best practice changes to maintain our professional standards. This includes understanding changing legislation that impacts our function.
5. Confidentiality
As with all respected professionals, confidentiality is critical in CPAs to ensure information is protected. We never disclose or put your information at risk of being exploited, either by irresponsible handling and management of materials or, perhaps more importantly, for personal gain. We have strict rules and processes in place to protect and maintain the confidentiality of your information, with swift action taken should there be a breach of data.
CPA Regulations And Standards Protecting You

CPAs and CPA firms must comply with regulations and standards aligned with the CPA Code, or the provincial equivalent, in the jurisdictions we practice. If there are conflicting codes in the areas where we work, we are expected to follow the strictest of the competing rules to ensure we act ethically. The Code is based on the five fundamental principles of ethics in accounting, and our firm is held accountable for proper conduct regarding the following:
- Our policies must remain consistent with the CPA Code
- We are responsible for anyone working for our firm who breaches the CPA code
- We must act when anyone working for our firm does not comply with our quality control procedures
- We must provide clear guidance on our quality control procedures to those under our supervision
- We must ensure we have procedures in place that make it easy for us to identify breaches of the code by anyone providing professional services within our firm to ensure accountability
- We cannot condone or instruct people in our employ to breach the CPA Code
- We cannot conceal breaches of the CPA Code if we discover someone in our employ has acted unethically
- We must take proper action when we discover breaches of the CPA Code
We require an intimate understanding of the Code so we can a) Quickly evaluate possible breaches and b) Take appropriate action required by law as soon as a breach is confirmed.
Red Flags Of Unethical CPA Practices

Although you want to trust your accountant, it’s important to keep your eyes wide open so you can spot red flags, including:
Inconsistencies: Although you’ve entrusted your finances to a CPA, you still need to review your reporting and statements. This ensures you can spot inconsistencies in your financial statements that indicate something is wrong, such as:
- Unexplained discrepancies
- Fluctuations in your financial reports
- Reports that seem unnecessarily complex and make it difficult to analyze or understand financial reporting
- Avoidance or inability to answer questions to your satisfaction when you bring up these issues with your CPA
Issues with internal controls: Malpractice often reveals itself when you feel your CPA is either attempting to manipulate your internal controls or circumventing them to avoid the discovery of fraud. This might include:
- A lack of checks and balances, leaving the accountant as the sole overseer of your financials
- Setting passwords that make it difficult to access critical information
- Not providing information for you to review
- Poor or limited record-keeping
- Missing documents, including receipts
- Adjusted entries
What Are Ethics In Accounting: Ethical Vs. Unethical Accounting Practices
Ethical accounting practices are based on transparency and accountability regarding the recording, analyzing, and reporting of financial information. Unethical accounting relies on misrepresenting financial statements, poor record-keeping, and unauthorized control to commit crimes such as embezzlement, insider trading, and bribery.
To ensure you’re working with an ethical accounting firm, call Intrepidium today at 778-800-7976 or click here to schedule a consultation.